Cost of acquisition of capital assets

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This query is : Resolved

Siddharth Gupta (Querist)

09 August 2012 Sir/Mam

Can interest payable on loan taken for purchase of a house property (which is a deduction permissible under section 24 of House Property income) be added to cost of acquisition of a house property for the purposes of capital gains?

If not, then why the principal repayment is allowed as deduction u/s 80C and also allowed to be treated as the cost of acquisition?

CA VISHNU GAVKARE

CA VISHNU GAVKARE (Expert)

10 August 2012 Dear Siddharth,
There is a difference between Capital and revenue Expenditure/Revenue.Further cost up to the asset is ready to put to use can be capitalized hence payment of stamp duty is allowed as deduction u/s. 80c. Interest on loan taken is revenue item and allowed as deduction u/s 24. Person can not avail two or more benefits of the same amount. as per provisions interest up to the date of completion of house property shall be accumulated and will be allowed as deduction in five equal installments. This means benefit of interest is allowed under sec 24 hence can not be taken again by adding the same to the cost of the asset.
further cost of house property and loan taken to finance are different transaction. deduction of loan is allowed to promot the savings whereas deduction of cost is allowed because it is an expenditure necessary to earn income.

Siddharth Gupta

Siddharth Gupta (Querist)

10 August 2012 Thank you very much Sir for your valuable reply..